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A  Memorandum  on  Trade 
With  Soviet  Russia 


Submitted  to  the  Committee  on  Foreign  Relations 
of  the  United  States  Senate,  January  1921,  in  con- 
nection with  the  Hearing  upon  the  Resolution  of 
the  Hon.  Joseph  I.  France,  Relating  to  the  Resump- 
tion of  Trade  with  Soviet  Russia. 


JOHN    SPARGO 

Author  of  "Russia  As  An  American  Problem 
Etc.,  Etc. 


Reprinted  with  the  Permission  of  the  Author 

BY   THE 

Russian  Information  Bureau  in  the  U.  S, 

WOOLWORTH    BUILDING 
NEW    YORK    CITY 


$7 


The  Question  of  Trade 
With  Soviet  Russia 

A  Memorandum  submitted  to  the  Committee  on  Foreign  Rela- 
tions of  the  United  States  Senate,  January,  1921,  in  connection 
with  the  hearing  upon  the  Resolution  of  the  Hon.  Joseph  I. 
France,  relating  to  the  resumption  of  trade  with  Soviet  Russia. 


JOHN  SPARGO 

Author  of  ''Russia  As  An  American  Problem"  etc.,  etc. 


I.     Introduction 

That  the  restoration  of  trade  between  the  United  States  and  \ 
Russia,  and  its  extensive  development,  are  desirable,  scarcely  f  I 
admits  of  discussion  or  dispute.  As  a  student  of  Russian  history  / 
and  politics  during  many  years,  I  have  long  held  that  the  interest 
of  the  civilized  world  in  general,  not  less  than  that  of  Russia 
herself,  require  the  intensification  of  Russian  production,  both 
industrial  and  agricultural,  and  the  expansion  of  Russia's  trade 
with  other  countries,  especially  those  of  the  Western  world. 
Quite  early  in  the  World  War,  in  the  latter  part  of  1914,  I  set 
forth  this  view  in  an  article  which  was  widely  commented  upon 
at  the  time,  and  was  translated  into  Russian  and  circulated 
among  the  leaders  of  the  Russian  democracy  by  my  friend,  the 
late  Mr.  George  Plechanov.  In  my  Russia  As  An  American 
Problem,  published  in  February,  1920,  I  set  forth  the  same  view 
at  some  length,  fortifying  it  with  an  elaborate  statistical  survey 
of  Russia's  economic  requirements  and  resources.  In  that  study 
I  examined  with  particular  care  the  credit  requirements  of  Russia 
and  the  basis  for  securing  such  credit. 

From  the  foregping  it  will  be  recognized  that  I  am  entitled 
to  claim  a  sympathetic  interest  in  the  object  of  the  Resolution 
by  Senator  France.     The  rapid  re-habilitation  of  the  agriculture  *\   *) 
of  Russia  is  needed  to  help  in  putting  an  end  to  the  famine  con-  ^ 

468385 


Memorandum  on  Trade 


ditions  which  prevail  over  such  a  large  part  of  Europe,  and  her 
raw  materials  are  scarcely  less  necessary  for  the  revival  of  the 
world's  industry.  Provided  only  that  it  can  be  accomplished 
with  safety  to  ourselves,  and  to  the  mutual  advantage  of  the  two 
countries,  trade  with  Russia  should  be  resumed,  upon  the  largest 
possible  scale,  regardless  of  Communism.  There  can  be  no  recon- 
struction of  Europe,  and  no  economic  stability  in  the  world,  until 
Russia  is  brought  into  normal  economic  relations  with  other  na- 
tions. Because  that  is  my  conviction,  based  upon  the  results  of 
much  study  of  the  problem,  I  desire  to  see  trade  with  Russia 
revived  as  quickly  and  as  extensively  as  possible,  and  deplore  the 
necessity  of  admitting  that  prolonged  and  careful  investigation 
and  study  of  all  the  available  data  have  forced  me  to  reach  the 
conclusion  that  it  is  not  possible  for  this  country  to  enter  into 
trade  relations  with  Soviet  Russia,  under  existing  conditions, 
without  incurring  serious  risk  of  unprecedented  economic  disaster 
and  revolutionary  upheaval.  In  support  of  this  view  I  desire  to 
submit  to  the  Committee  on  Foreign  Relations  the  following 
observations  and  facts: 

II.     The  Problem  Misrepresented 

In  a  formal  statement  published  on  Dec.  21,  1920,  the  former 
Secretary  of  the  Treasury,  the  Hon.  William  G.  McAdoo,  said: 
"I  have  long  been  convinced  that  we  ought  to  re-establish  trade 
relations  with  Russia.  It  is  not  necessary  to  recognize  the  Soviet 
Government  to  do  this.  Why  should  we  refuse  to  let  people 
in  distress  in  Russia  or  elsewhere  buy  our  products  if  they  can 
pay  for  them,  no  matter  what  form  of  government  they  may 
choose  for  themselves?"  I  find  it  difficult  to  comprehend  that 
the  man  who  as  Secretary  of  the  Treasury  handled  with  such 
mastery  the  problems  of  war  finance,  could  so  thoroughly  mis- 
conceive the  very  nature  of  the  problem  of  dealing  with  Soviet 
Russia.  Ignoring  the  well-known  fact  that  the  present  Govern- 
ment of  Russia,  and  the  form  of  that  Government,  cannot  by 
any  stretch  of  the  imagination  be  said  to  represent  the  choice  of 
the  Russian  people,  I  desire  to  address  myself  to  two  other  points 
in  that  statement. 

Mr.  McAdoo  asks  "Why  should  we  refuse  to  let  people  in 


With  Soviet  Russia 


distress  in  Russia  or  elsewhere  buy  our  products  if  they  can  pay 
for  them,  no  matter  what  form  of  government  they  may  choose 
for  themselves?"  The  issue  here  drawn  does  not  exist  in  fact, 
as  every  member  of  the  Senate  Committee  on  Foreign  Relations 
must  be  aware.  Since  the  Government  of  the  United  States, 
in  July,  1920,  removed  practically  all  restrictions  upon  trade 
with  Russia,  except  as  applied  to  goods  and  materials  for  military 
uses — restrictions  which  amount  to  a  limited  embargo,  and  not 
a  blockade — every  possible  justification  for  such  a  view  of  the 
problem  as  that  expressed  by  Mr.  McAdoo  has  ceased  to  exist. 
In  New  Haven,  Connecticut,  a  few  days  ago  I  saw  large  adver- 
tising posters  conspicuously  displayed,  calling  upon  the  thou- 
sands of  unemployed  workers  in  that  city  to  demand  the  removal 
of  the  "blockade"  of  Soviet  Russia,  which,  it  was  alleged,  was 
responsible  for  their  unemployment.  The  appeal  emanated  from 
well-known  pro-Bolshevist  sources.  The  danger  of  such  an  ap- 
peal to  masses  of  unemployed  men  at  this  time,  can  hardly  be 
over-emphasized.  It  is,  of  course,  quite  easy  to  understand  the 
recklessness  of  the  pro-Bolshevist  propagandists,  but  it  is  not  so 
easy  to  understand  why  responsible  statesmen  should  add  to  such 
dangerous  propaganda  the  prestige  and  authority  of  their  ap- 
proval. 

In  all  the  communications  made  by  the  Government  of  the 
United  States  to  other  governments  upon  this  question,  and  all 
the  published  statements  of  policy  relating  to  Russia  made  by  the 
present  Administration,  there  is  not  a  sentence  which  can  be 
reasonably  interpreted  as  an  objection  on  the  part  of  the  Govern- 
ment or  the  people  of  the  United  States  to  Russia  having  a  gov- 
ernment by  Soviets.  On  the  contrary,  the  Government  of  the 
United  States  has  consistently  recognized  the  right  of  Russia  to 
maintain,  as  an  inviolable  prerogative  of  her  sovereignty,  any 
form  of  government  she  pleases,  so  long  as  she  does  not  violate 
the  rights  of  other  nations  or  of  their  nationals.  We  do  not 
"refuse  to  let  people  who  are  in  distress  in  Russia  or  elsewhere 
buy  our  products  if  they  can  pay  for  them."  That  issue  simply 
does  not  exist,  either  for  the  Government  or  the  people  of  the 
United  States,  or  the  Government  or  the  peoples  of  any  other 
nations.  I  make  this  statement  in  the  most  sweeping  terms  pos- 


Memorandum  on  Trade 


sible;  it  applies  equally  to  the  United  States,  its  Allies  in  the 
recent  War,  the  enemy  nations  and  all  the  neutral  nations. 

III.     Responsibility  of  the  Soviet  Government 

The  fact  is  that  instead  of  our  Government  refusing  to  let 
the  people  of  Russia  buy  our  products,/*/* e  present  Soviet  Gov- 
ernment refuses  that  right  to  its  citizens.  No  Russian  citizen  is 
at  liberty  to  buy  goods  in  this  or  any  other  country  and  to  import 
them  into  Russia.  The  Soviet  Government  has  suppressed  every 
right  of  private  citizens,  whether  individuals  or  commercial  cor- 
porations, to  engage  in  foreign  trade.  In  Soviet  Russia  foreign 
trade,  both  export  and  import,  is  an  absolute  monopoly  of  the 
State.  No  trade  with  Russia  can  be  had  except  through  the 
Soviet  Government  itself.  Mr.  H.  G.  Wells,  the  English  writer, 
in  a  widely  published  brief  for  the  resumption  of  trade  with 
Soviet  Russia,  has  had  to  admit  that  this  is  the  case,  and  that  "it 
is  hopeless  and  impossible,  therefore,  for  individual  persons  and 
firms  to  think  of  going  to  Russia  to  trade."  He  rightly  insists 
that  trade  can  only  be  had  with  Russia  through  the  medium  of 
the  Soviet  Government  itself.  That  he  is  quite  correct  in  making 
this  statement,  there  is  an  abundance  of  incontestable  evidence, 
furnished  by  the  accredited  representatives  and  spokesmen  of  the 
Soviet  Government.  For  the  present  I  shall  content  myself  with 
a  single  citation  upon  the  point :  On  June  8,  1920,  the  Supreme 
Economic  Council  of  the  League  of  Nations  addressed  a  series 
of  sixteen  questions  to  the  delegates  of  the  Soviet  Government. 
The  first  three  questions  were  as  follows: 

"1.  Are  the  delegates  of  the  Soviet  Government  the  only 
persons  who  have  the  right  to  carry  on  foreign  trade  outside 
Russia  ? 

"2.  Is  the  Soviet  Government  the  only  body  with  which  for- 
eign traders  will  be  allowed  to  do  business  in  Russia  ? 

"3.  What  is  the  legal  effect  and  what  will  be  the  consequences 
of  contracts  made;  (a)  with  bodies  and  persons  in  districts  of 
Old  Russia,  which  do  not  at  present  recognize  the  authority 
of  the  Soviet  Government;  (b)  with  bodies  or  persons  in  Soviet 
Russia  not  included  under  question  2?" 

On  June  26,  1920,  at  the  meeting  of  the  Supreme  Economic 


With  Soviet  Russia 


Council,  the  Russian  Soviet  Delegation,  Messrs.  Krassin,  Nogin, 
Rosovski,  and  Klyshko,  were  present  and  submitted  their  replies 
to  the  questions  of  the  Council.  The  replies  to  the  three  questions 
quoted  above  were  as  follows : 

.  "1.  The  foreign  trade  of  Soviet  Russia  is  a  monopoly  of  the 
Government.  The  organization  through  which  this  monopoly 
functions  is  the  National  Commissariat  for  Foreign  Trade,  which 
exercises  its  powers  with  the  assistance  of  its  representatives  and 
agents.  The  delegation  of  the  Soviet  Government  is  the  sole 
body  which  possesses  full  powers  to  carry  out  negotiations  with 
foreign  Governments  for  the  resumption  of  trade. 

"2.  The  National  Commissariat  for  Foreign  Trade  and  its  or- 
ganizations is  the  only  body  with  which  foreigners  will  be  able 
to  carry  out  trade  in  Russia. 

"3.  The  only  contracts  which  have  any  legal  recognition  are 
agreements  and  contracts  made  with  the  Commissariat  for  For- 
eign Trade  and  its  organizations,  (a)  No  responsibility  as  to  the 
fulfillment  of  agreements  and  contracts  made  "with  bodies  and 
persons  in  districts  of  Old  Russia  which  do  not  at  present  recog- 
nize the  authority  of  the  Soviet  Government"  can  be  taken  by 
the  Soviet  Government,  such  agreements  having  no  legal  stand- 
ing, (b)  An  answer  can  be  given  on  examination  of  each  in- 
dividual case." 

I  respectfully  submit  that  ( 1 )  the  Soviet  Government  itself  has 
suppressed  the  right  of  its  citizens  to  trade  with  us,  and  that  it 
is  contrary  to  the  fact  to  state  that  there  are  people  in  Russia 
needing  our  goods,  for  which  they  are  willing  and  able  to  pay, 
who  are  prevented  from  purchasing  such  goods  by  any  act  of  the 
Government  or  the  people  of  the  United  States;  (2)  that  there 
can  be  no  important  amount  of  trade  with  Soviet  Russia  without 
recognition  of  the  Soviet  Government,  for  it  is  manifestly  impos- 
sible for  us  to  have  trade  transactions  involving  credits  of  many 
millions,  and  even  billions,  of~dollars,  with  a  government  which 
we  do  not  recognize  and  with  which  we  are  unwilling  to  main- 
tain normal  relations. 

IV/   'The  Problem  As  It  Is 

.e  real  problem  of  the  resumption  of  trade  with  Russia,  un- 
der existing  conditions,  resolves  itself  into  the  following:    The 


8  Memorandum  on  Trade 


Soviet  Government,  which  rules  without  any  other  sanction  than 
brutal  force,  wants  to  purchase,  principally  upon  credit,  several 
billions  of  dollars  worth  of  our  products.  Outside  of  such  securi- 
ties for  credit  as  it  may  have  to  offer,  it  has  a  limited  amount  of 
gold  and  platinum,  and  some  raw  materials,  which  it  would  offer 
in  exchange  for  our  goods.  The  sum  of  the  value  of  the  com- 
modities it  has  to  offer  in  exchange,  including  the  gold  and  plati- 
num, is  so  small  in  comparison  with  the  volume  of  the  value  of 
the  goods  desired  as  to  be  almost  negligible.  It  is,  and  must  of 
necessity  be,  principally  a  question  of  trade  upon  a  credit  basis. 

The  character  of  the  Soviet  Government,  its  stability,  its  re- 
sources, the  degree  of  support  accorded  to  it  by  the  Russian  peo-     ^ 
pie,  the  prospects  of  successful  revolt  against  it  and  repudiation     7  V* 
of  its  acts,  its  attitude  toward  foreign  nations  and  toward  such    * 
of  their  nationals  as  may  be  its  creditors,  are  matters  with  which 
we  may  legitimately  concern  ourselves.    More  than  that,  they  are 
matters  of  vital  importance  which  we  cannot  ignore  or  treat  with_^ 
indifference  without  incurring  the  risk  of  serious  disaster.     I-*"" 
submit  that  the  Government  of  the  United   States,  like  every 
other  civilized  Government,  is  in  honor  and  morals  bound  to 
protect  the  interests  of  its  nationals,  and  to  insist  upon  just  treat- 
ment by  other  Governments,  in  accordance  with  the  established 
principles  of  international  law,  for  itself  and  its  nationals.^I  sub- 
mit, further,  that  if  there  is  good  reason  to  believe  that  the  Soviet 
Government  will  not  deal  honestly  and  in  good  faith  with  such 
of  our  citizens  as  extend  credit  to  it,  but  that  in  pursuance  of  a 
deliberate  policy  it  will  wrong  them,  the  United  States  Govern- 
ment is  abundantly  justified  in  discouraging  its  nationals  from 
entering  into  trade  relations  with  the  Soviet  Government,  and 
warning  them  that  if  they  do  so,  they  must  do  so  at  their  own 
risk. 

V.     The   Testimony  of  H.   G.   Wells 

Upon  this  point  the  testimony  of  Mr.  H.  G.  Wells,  from  whom 
I  have  previously  quoted,  is  pertinent.  The  fact  that  Mr.  Wells 
has  indulged  in  certain  superficial  criticisms  of  the  Bolshevist 
regime,  and  the  further  fact  that  he  denies  being  a  believer  in 
Bolshevism,  must  not  be  permitted  to  blind  us  to  the  significance 


With  Soviet  Russia 


of  his  testimony.  He  visited  Russia  upon  the  invitation  of  the 
Soviet  Government,  and  as  its  guest.  He  enjoyed  the  privileges 
of  a  guest,  and  was  subject  to  a  guest's  obligations.  His  criti- 
cisms of  the  Bolshevist  regime  and  his  denial  of  belief  in  Bol- 
shevism are  simply  the  foil  against  which  he  sets  to  maximum 
advantage  the  argument  in  favor  of  trade  with  Soviet  Russia. 
Mr.  Wells  says: 

"In  all  Russia  there  remain  now  no  commercial  individuals 
and  bodies  with  whom  we  can  deal  who  will  respect  the  conven- 
tions and  usages  of  western  commercial  life.  The  Bolshevist 
Government,  we  have  to  understand,  has,  by  its  nature,  an  in- 
vincible prejudice  against  individual  business  men;  it  will  not 
treat  them  in  a  manner  that  they  will  regard  as  fair  and  honor- 
able; it  will  distrust  them  and,  as  far  as  it  can,  put  them  at  the 
completed  disadvantage. 

"It  is  hopeless  and  impossible,  therefore,  for  individual  persons 
and  firms  to  think  of  going  to  Russia  to  trade"  jl 

That  the  statement  of  Mr.  Wells  is  true  will  not  be  doubted  by 
any  one  who  is  familiar  with  the  facts.  The  whole  costly  and 
far-reaching  propaganda  carried  on  in  this  country  to  persuade 
our  business  men  that  only  our  Government  prevents  their  en- 
joyment of  a  trade  with  Russia  from  which  immense  profits 
might  be  derived,  the  repeated  offers  of  valuable  concessions  to 
American  capitalists,  such  as  the  much  discussed  Kamchatka 
concession  to  Mr.  Washington  B.  Vanderlip  and  his  associates, 
are  thoroughly  dishonest  and  intended  to  attain  political  rather 
than  commercial  ends,  as  I  shall  presently  attempt  to  prove  by 
evidence  which  your  honorable  body  will  recognize  as  conclusive 
and  incontestable. 

For  the  moment,  however,  let  me  assume  the  correctness  of  the 
statement  by  Mr.  Wells:  If  there  are  no  individual  business 
men  or  firms  in  Russia  with  whom  American  citizens  can  trade, 
and  if  it  is  "hopeless  and  impossible"  for  any  individual  citizens 
or  firms  "to  think  of  going  to  Russia  to  trade,"  obviously  there 
can  be  no  alternative  method  of  resuming  trade  with  Soviet  Rus- 
sia save  through  a  revolution  in  our  own  economic  system  which 
would  make  our  Government  the  sole  agency  for  carrying  on 
such  trade.  In  other  words,  trade  with  Russia  must  be  made 


10  Memorandum  on  Trade 

a  Government  monopoly,  the  United  States  Government  dealing 
directly  with  the  Soviet  Government.  This  means 'one  of  two 
things :  either  we  must  go  bodily  over  to  Communism,  so  that 
the  Communist  Government  of  the  United  States  would  deal 
directly  with  the  Communist  Government  of  Soviet  Russia,  or  the 
United  States  Government  must  itself  assume  the  functions  of  a 
trustee  and  agent  conducting  trade  with  Soviet  Russia  on  behalf 
of  such  of  our  citizens  as  may  seek  profit  through  such  trade. 
Bearing  in  mind  the  fact  that  the  bulk  of  the  goods  required  by 
Russia  must  be  furnished  upon  credit,  it  would  be  necessary  in 
either  case  for  our  Government  to  accept  the  securities  of  Soviet 
Russia  to  the  extent  of  billions  of  dollars. 

If  there  are  no  commercial  individuals  or  bodies  in  Russia  with 
whom  our  citizens  can  trade,  but  only  a  Communist  regime,  which 
has  arrogated  to  itself  the  powers  of  government,  which  is  the 
only  body  empowered  to  trade,  asserting  sole  ownership  of  all 
Russian  resources,  raw  materials,  agricultural  products,  industrial 
establishments,  and  the  like ;  if  moreover,  that  Communist  regime 
is  confessedly  incapable  of  treating  our  business  men  honestly, 
and  is  bound  to  "put  them  at  the  completest  disadvantage,"  why 
should  American  citizens  invest  in  such  a  poor  risk?  And  if  any 
considerable  number  of  citizens  do  enter  upon  trade  under  these 
conditions,  and  are  wronged  by  the  Bolshevist  Government,  is 
it  not  practically  certain  that  they  will  demand  that  the  Govern- 
ment of  the  United  States  protect  their  rights,  and  that  there  will 
thus  be  drawn  an  exceedingly  dangerous  issue  between  the  two 
Governments  ? 

VI.     Bolshevist  Business  Methods 

If  it  is  useless  for  individual  business  men  or  firms  to  expect 
honest  and  honorable  treatment  at  the  hands  of  the  Soviet  Gov- 
ernment, is  there  any  good  reason  for  believing  that  "capitalist 
governments"  would  be  better  treated  ?  All  the  available  evidence 
tends  to  establish  the  contrary.  Confining  myself  for  the  moment 
to  trade  questions,  let  me  cite  a  few  specific  cases  from  which 
individual  citizens  and  our  Government  may  well  take  warning : 
At  the  San  Remo  meeting  of  the  Supreme  Economic  Council, 
May  22,  1920,  the  British  representative  made  a  report  formally 


With  Soviet  Russia  11 

protesting  that  a  quantity  of  flax  stored  at  Reval  was  being 
offered  for  sale  by  the  agents  of  the  Soviet  Government,  not- 
withstanding the  fact  that  it  had  already  been  bought  and  paid 
for  by  the  British  Government.  When  I  was  in  Sweden,  in  Octo- 
ber, 1920,  much  indignation  was  being  expressed  by  bankers  and 
merchants  in  Stockholm  because  gold  tendered  to  Swedish  firms 
in  payment  for  goods  supplied,  had  been  found  to  contain  a  large 
percentage  of  bismuth.  Warned  by  the  Swedish  experience,  Brit- 
ish firms  which  were  negotiating  with  the  Krassin  Trade  Mission, 
demanded  that  a  clause  be  inserted  in  the  contracts  providing  for 
an  assay  of  the  gold  before  its  acceptance.  This  was  surely  a 
reasonable  enough  proposal,  and  one  which  the  Soviet  Govern- 
ment could  hardly  have  declined  if  it  had  been  acting  in  good 
faith.  As  a  matter  of  fact,  the  Soviet  representatives  refused  to 
agree  to  the  demand  and  the  negotiations  were  dropped. 

On  June  26,  1920,  at  the  yearly  meeting  of  the  Deutch-Ost- 
Europaischer  Wirtschaftsverband,  held  at  Elbefeld,  Germany,  the 
whole  question  of  trade  between  Germany  and  Soviet  Russia  was 
threshed  out.  Mr.  Meyer,  Manager  of  the  Society,  said:  "We 
have  negotiated  with  the  representatives  of  the  Soviet  Govern- 
ment in  Berlin  and  in  Copenhagen  since  1919,  and  they  have 
always  tried  (and  failed)  to  fool  us.  They  demanded  offers  of 
goods,  promised  a  great  deal,  but  as  yet  have  done  nothing.  They 
have  always  found  some  excuse  for  not  abiding  by  their  word 
.  .  .  I  do  not  think  that  it  will  be  possible  for  private  firms  to 
trade  with  Russia  in  the  near  future."  Quite  similar  is  the 
statement  issued  by  the  London  representative  of  the  Norwegian 
Government,  in  February,  1920.  Though  not  charging  the  So- 
viet Government  or  its  representative,  Litvinov,  with  fraud,  the 
statement  did  charge  that  Litvinov's  commercial  negotiations  with 
Norway  were  merely  camouflaged  political  efforts.  Mr.  Mjelde 
said :  "Mr.  Litvinov's  proposals  are  considered  impossible  from 
a  commercial  point  of  view,  and  in  addition,  he  has  made  them 
dependent  on  conditions  that  would  practically  involve  political 
recognition  by  Norway  of  Soviet  Russia."  At  the  meeting  of  the 
Supreme  Economic  Council,  July  26,  1920,  a  memorandum  was 
submitted  by  the  Norwegian  representatives,  setting  forth  that 
certain  timber  offered  for  sale  by  the  agents  of  the  Soviet  Gov- 


12  Memorandum  on  Trade 

ernment  was  the  property  of  a  Norwegian  firm,  and  warning 
was  given  that  necessary  steps  would  be  taken  to  contest  the 
claims  of  any  other  person  or  persons  to  that  timber.  In  con- 
nection with  the  Norwegian  protest,  the  British  Foreign  Office, 
after  consulting  with  the  Supreme  Economic  Council  gave  this 
significant  pledge :  That  the  regulations  which  will  be  established 
in  respect  of  goods  hitherto  belonging  to  British  merchants  and 
at  present  seized  by  the  Soviet  Government,  will  be  extended  fully 
to  foreign  traders.  According  to  that  pledge,  the  rule  laid  down 
by  the  British  courts  in  a  recent  case  involving  title  to  certain 
timber  disposed  of  by  the  Soviet  Government  would  be  applied 
to  all  similar  cases  in  Great  Britain,  regardless  of  the  nationality 
of  the  claimants.  % 

In  the  British  case  in  question,  a  Russian  firm  having  a  branchVv 
in  England,  secured  a  writ  of  attachment  against  certain  timber 
which  arrived  at  a  British  port  from  Soviet  Russia.  It  had  been 
sold  by  Krassin  and  his  colleagues,  acting  as  the  agents  of  the 
Soviet  Government,  to  a  British  firm.  The  claimant  company 
proved  that  the  timber  had  belonged  to  it  and  has  been  confis- 
cated by  the  Bolshevist  Government  in  1918.  The  judgment  of 
the  court  returned  the  timber  to  its  original  owners  and  denied 
the  validity  of  the  confiscation  by  the  Bolsheviki  and  the  subse- 
quent sale.  The  decision  of  Mr.  Justice  Roche,  which  is  of  the 
utmost  importance  in  connection  with  this  whole  question,  set 
forth  the  right  of  the  Soviet  Government  to  confiscate  and  subse- 
quently dispose  of  property  could  not  be  admitted  in  Great  Brit- 
ain, because,  "the  British  Government  had  never  recognized  the 
Soviet  Government,  which  in  this  country  (Great  Britain)  had, 
therefore,  no  legal  status."  It  is  apparent  that,  according  to  Mr. 
Justice  Roche,  recognition  of  the  Soviet  Power  as  the  de  jure 
Government  of  Russia  would  make  it  legal  for  one  British  trader 
or  set  of  traders  to  receive  in  payment  the  goods  belonging  to/f 
another  trader  or  set  of  traders.  y 

VII.     The  Soviet  Government  and  "Concessions" 

Leaving  the  question  of  recognition  of  the  Soviet  Government 
for  examination  a  little  later  on,  let  me  deal,  very  briefly,  with 
the  matter  of  economic  concessions,  and,  in  particular,  the  Bol- 


With  Soviet  Russia  13 

shevist  policy  as  illustrated  by  the  dealings  with  the  Vanderlip 
syndicate  already  referred  to.  We  must  remember  that  the  con- 
cessions were  offered  to  American  citizens  in  part  return  for 
goods  valued  at  several  hundreds  of  millions  of  dollars,  by  the 
Soviet  Government  which  is  seeking  credit  here  to  the  extent  of 
several  billions  of  dollars,  and,  at  the  same  time,  full  recognition 
by  our  Government.  I  quote  translations  of  extracts  from 
speeches  by  Lenin  and  Zinoviev,  published  in  the  official  Bolshe- 
vist press,  and  respectfully  suggest  that  the  Committee  on  Foreign 
Relations  request  the  State  Department  to  supplement  these  with 
the  translation  of  other  important  statements  by  the  responsible 
leaders  of  the  Soviet  Power  upon  questions  of  international  pol- 
icy. The  following  passage  is  from  an  important  address  deliv- 
ered by  Lenin  at  the  Moscow  Convention  of  the  Communist 
Party  in  November,  1920,  and  reported  in  the  Petrograd  Pravda : 

"The  differences  between  our  enemies  have  recently  increased, 
particularly  in  connection  with  the  proposed  concession  to  be 
granted  to  a  group  of  American  capitalist  sharks,  headed  by  a 
multi-millionaire  who  reckons  upon  grouping  around  himself  a 
number  of  other  multi-millionaires.  Now  all  the  communications 
coming  from  the  Far  East  bear  testimony  to  the  fact  that  there 
is  a  feeling  of  extreme  bitterness  in  Japan  in  connection  with 
this  agreement,  although  the  latter  has  not  been  signed  yet  and 
is  so  far  only  a  draft." 

On  Nov.  23,  1920,  the  official  Bolshevist  paper,  the  Krasnaya 
Gazetta,  published  a  report  of  the  same  address  containing  the 
following  paragraph  dealing  with  the  subject  of  concessions : 

"Our  granting  of  concessions  to  the  American  millionaires  will 
serve  to  make  relations  between  Japan  and  America  more 
strained.  There  is  already  talk  in  Japan  that  Russia  is  driving 
it  to  war  with  America.  We  shall  utilize  their  conflict  for  our 
own  interests.  By  signing  concession  agreements  with  the  Bour- 
geoisie, we  gain  a  moral  as  well  as  material  victory.  Our  foes, 
burning  with  desire  to  crush  us  by  armed  force,  are  now  com- 
pelled to  conclude  agreements  with  us,  and  to  contribute  to  our 
consolidation  and  strengthening.  To  condemn  us  for  signing 
the  concessions  would  be  right  only  if  we  were  able  to  overthrow 
capitalism  throughout  the  world  with  the  effort  of  one  country." 


14  Memorandum  on  Trade 

On  Dec.  1,  1920,  the  Petrograd  Pravda,  number  270,  published 
the  report  of  yet  another  speech  upon  this  subject  by  Lenin.  Ac- 
cording to  this  official  Bolshevist  newspaper,  in  addressing  a  meet- 
ing of  secretaries  of  the  Communist  Party  Nuclei — the  organiza- 
tion through  which  the  numerically  negligible  Bolshevist  minority 
contrives  to  dominate  the  majority — Lenin  said : 

"We  have  been  offered  a  plan  of  a  concession  on  Kamchatka 
for  ten  years.  The  American  billionaire  stated  frankly  that 
America  wants  to  have  in  Asia  a  base  for  the  eventuality  of  war 
with  Japan.  This  billionaire  said  that  if  we  will  sell  Kamchatka, 
he  can  promise  us  such  an  enthusiasm  among  the  population  of 
the  United  States  that  the  American  Government  will  immediately 
recognize  the  Soviet  Power  in  Russia.  If  we  shall  merely  lease 
it,  the  enthusiasm  will  be  smaller. 

"Until  now  we  have  defeated  the  bourgeoisie  because  it  does 
not  know  how  to  act  in  unison.  Now  the  enmity  between  the 
United  States  and  Japan  is  growing.  We  shall  take  advantage 
of  this  and  offer  to  lease  Kamchatka,  instead  of  giving  it  away 
gratis.  Has  not  Japan  grabbed  from  us  an  immense  stretch  of 
land  in  the  Far  East  ?  It  is  far  more  advantageous  to  us  to  lease 
Kamchatka  and  obtain  from  there  part  of  its  products,  since  in 
reality  we  do  not  control  it  anyhow,  and  cannot  use  it. 

"The  agreement  has  not  yet  been  signed,  but  we  are  already 
at  this  time  intensifying  the  friction  between  our  enemies.  Also, 
it  is  a  good  form  of  concessions.  We  shall  give  away  a  few  mil- 
lion dessiatines  (1  dessiatine  equals  2.7  acres)  of  forest  in  the 
Archangel  Province  which  we  are  unable,  in  spite  of  our  best 
efforts,  to  exploit.  A  chess-board  system  will  be  established 
whereby  our  own  parcel  of  forest  comes  alongside  of  a  leased 
concession,  and  this  we  shall  be  able  to  exploit,  and  our  workers 
will  thus  learn  technical  skill  from  them.  All  that  is  very  advan- 
tageous to  us. 

"Concessions  are  not  peace.  They  are  also  war,  only  in  a  dif- 
ferent form,  more  advantageous  to  us.  The  war  will  be  fought 
on  the  economic  front.  It  is  possible  that  they  will  try  to  restore 
free  trade,  but  then  they  do  not  sign  the  agreement  alone,  without 
us.  They  are  bound  to  abide  by  all  our  laws,  and  in  case  of  war 
the  whole  property  remains  ours  by  right  of  war.  Concessions 


With  Soviet  Russia  15 

are  merely  a  continuation  of  the  war  on  an  economic  plane,  only 
in  this  case  we  no^  longer  destroy  but,  on  the  contrary,  develop 
our  productive  forces.  No  doubt  they  will  attempt  to  deceive 
us  and  to  evade  our  laws,  but  then  we  have  with  us  the  Ail- 
Russian,  the  Moscow,  the  Provincial  and  all  the  other  Extraordi- 
nary Commissions,  so  we  do  not  fear  them." 

Thus  the  Bolsheviki  are  relying  upon  the  Red  Terror  to  deal 
with  our  investors.  On  Dec.  8,  1920,  Zinoviev,  by  many  regarded 
as  the  ablest  and  most  influential  Bolshevist  leader  next  to  Lenin, 
delivered  an  important  address  at  a  meeting  in  Petrograd.  From 
the  report  of  that  address  published  in  the  Pravda  of  Petrograd, 
number  281,  Dec.  14,  1920,  the  following  paragraphs  are  quoted: 

"The  position  is  this :  Our  Socialist  republic  is  encircled  by 
capitalism.  Obviously,  Socialism  and  Capitalism  cannot  main- 
tain neighbourly  relations  for  any  length  of  time.  History  knows 
of  two  issues :  either  the  world  revolution,  or  capitalism  must  win. 
But  the  period  of  "balance"  will  last  several  years.  Meanwhile, 
the  forces  develop  in  such  a  manner  that  Socialism  is  gaining 
strength,  whilst  Capitalism  is  waning. 

"The  question  of  concessions  is  a  question  of  economic  peace 
between  ourselves  and  the  Powers  of  the  West.  Some  people 
call  this  a  Brest-Litovsk.  Such,  however,  is  not  the  case.  If  we 
are  in  need  of  commercial  relations  with  the  West,  the  Western 
Powers  stand  in  greater  need  of  trade  with  us  owing  to  the  un- 
precedented industrial  and  economic  crisis. 

"It  is  likewise  wrong  to  state  that  in  granting  concessions  to 
Western  Capitalism,  Russia  will  come  under  its  influence  and  be- 
come its  colony.  Concessions  would  have  long  since  been  agreed 
to  by  the  West  had  they  been  altogether  profitable.  //  there  be 
any  danger  in  concessions  the  danger  is  solely  to  the  Western 
capitalists,  into  whose  camp  the  concessions  may  bring  a  severe 
split. 

"To  use  plain  language,  the  gist  of  the  matter  is :  who  is  going 
to  be  outwitted?  We  think  that  we  shall  outwit  them,  as  we 
shall  be  capable  of  defending  ourselves  in  the  encounter  with 
the  business  men  of  the  West. 

"The  economic  side  of  the  question  is  very  important.  In  carry- 
ing out  the  concessions,  the  capitalists  will  be  compelled  to  erect 


16  Memorandum  on  Trade 

all  kinds  of  plants  which  will  in  the  end  remain  in  our  possession. 
As  a  matter  of  fact,  in  the  present  conditions  the  capitalists  are 
but  a  medium  for  the  transfer  of  the  riches  they  have  accumulated 
to  the  common  use  of  the  world  at  large. 

"It  is  therefore  not  a  question  of  selling  the  country,  but  of 
using  Western  capital  for  world  revolution.  That  is  our  view 
which  is  shared  by  the  workmen  of  the  West  .  .  . 

"Fears  are  being  expressed  that  foreign  capital  will  cling  to 
our  property,  will  endeavour  to  cheat  and  deceive  us,  and  will 
exploit  our  riches  in  a  rapacious  manner.  In  this  connection,  we 
shall  see  to  it  that  they,  and  not  ourselves,  are  the  losers. 

"Together  with  our  raw  materials,  we  shall  carry  to  the  West 
the  revolutionary  spirit,  the  proletarian  unity  which  have  main- 
tained us  in  power  for  over  three  years.  We  must  try  to  remain 
at  peace  with  all  countries  as  long  as  possible.  Concessions  are 
one  of  the  means  to  this  end.  It  is  stipulated  in  our  treaty  that 
the  owners  of  the  concession  lose  all  the  rights  granted  to  them 
by  the  agreement  as  soon  as  hostile  action  is  taken  by  the  respec- 
tive Government.  It  should  be  noted  that  questions  of  war  and 
peace  are  decided  by  big  bankers.  War  against  us  would  obvious- 
ly be  against  their  interests." 

VIII.     The  Question  of  Security  for  Credit 

From  these  typical  utterances  by  the  responsible  leaders  of  the 
Soviet  Power,  which  might  easily  be  supplemented  by  many  edi- 
torial declarations  from  the  official  Bolshevist  press  conceived  in 
the  same  spirit,  it  is  apparent  that  the  Bolshevist  policy  of  offer- 
ing to  grant  great  economic  concessions  to  American  capitalists, 
is  part  of  a  Machiavelian  policy  which  has  for  its  object  the 
embroilment  of  this  and  other  nations  in  controversy  and,  even- 
tually, war.  It  has  no  important  bearing  upon  the  present  eco- 
nomic needs  of  Russia.  Such  concessions  as  that  offered  to  Ger- 
man, Swedish  and  Norwegian  syndicates,  and  by  them  rejected, 
must  be  entirely  worthless  unless  there  is  a  large  investment  of 
capital  to  exploit  them.  For  such  investment  it  is  necessary  that 
there  should  be  at  least  that  measure  of  security  which  can  only 
rest  upon  the  good  faith  of  the  government  granting  the  conces- 
sion. From  the  foregoing  utterances  by  Lenin  and  Zinoviev  it 


With  Soviet  Russia  17 

can  be  clearly  seen  that  there  is  not,  and  there  cannot  be,  any 
assurance  that  the  Bolsheviki  will  not  confiscate  the  capital  in- 
vested in  such  concessions  and  cancel  the  concessions  themselves, 
if  and  when  it  suits  their  purpose  so  to  do.  The  menace  of  con- 
fiscation is  clearly  expressed  in  the  utterances  quoted.  After  all, 
this  is  perfectly  natural  and  not  at  all  surprising.  Why  should 
we  expect  the  Bolsheviki,  whose  primary  object  is  the  destruc- 
tion of  capitalism,  and  who  have  confiscated  the  capital  of  Rus- 
sian capitalists  with  remorseless  severity,  to  tolerate  American 
capitalists  in  Russia  one  day  longer  than  desperate  need  forces 
them  to  do  so? 

To  the  members  of  the  Senate  Committee  on  Foreign  Relations, 
and  to  all  my  fellow  citizens,  I  respectfully  submit  that  while 
this  country  needs  a  great  extension  of  its  foreign  trade  upon  the 
basis  of  long-time  well-secured  credit,  and  can  best  serve  the 
harrassed  and  stricken  nations  of  Europe  thereby,  nothing  could 
be  more  dangerous  to  us  than  to  attempt  such  a  large  volume  of 
trade  upon  the  basis  of  insecure  credit,  and  especially  to  incur 
the  risk  of  probable  repudiation  by  the  debtor  nations.  We  know 
that  the  avowed  purpose  of  the  present  rulers  of  Russia  is  the 
destruction  of  the  prevailing  economic  system  throughout  the 
world,  and  the  overthrow  of  all  existing  non-Communist  govern- 
ments. Can  we  suppose  that  they  would  fail  to  perceive  that  by 
repudiation  of  their  obligations  to  our  manufacturers  and  traders 
and  by  the  confiscation  of  millions  or  billions  of  American  in- 
vestments they  could  precipitate  a  disastrous  crisis  in  this  coun- 
try? Can  we  reasonably  believe  that  perceiving  this  opportunity 
they  would  fail  to  make  use  of  it  ?  Let  there  be  no  mistake  made 
upon  this  point :  We  have  already  strained  our  economic  system 
to  the  limit  of  safety.  Such  a  financial  and  industrial  crisis  as 
could  easily  be  precipitated  by  the  Soviet  Power  by  means  of 
the  repudiation  of  its  obligations  to  us  and  the  confiscation  of 
American  investments,  and  the  inevitable  ruin  of  many  of  our 
enterprises  consequent  thereon,  might  easily  prove  the  means  of 
bringing  about  the  collapse  of  our  entire  economic  system.  Noth- 
ing could  well  be  more  certain  or  obvious  than  the  fact  that  such 
an  extensive  trade  with  Russia,  under  existing  conditions,  would 
be  an  invitation  to  economic  bankruptcy  and  to  revolution. 


18  Memorandum  on  Trade 

May  I  remind  you,  in  this  connection,  that  danger  of  repudia- 
tion and  its  disastrous  consequences  rests  not  only  upon  the  per- 
fidy of  the  Bolsheviki,  but  equally  upon  the  patriotism  of  the 
democratic  anti-Bolshevist  forces  of  Russia  ?  Paradoxical  as  this 
may  at  first  seem,  it  is  entirely  natural  and  quite  easy  of  compre- 
hension. The  Russian  people  are  not,  and  cannot  be,  reconciled 
to  Bolshevist  rule.  The  struggle  against  that  infamous  tyranny 
goes  on.  Soon  or  late — perhaps  sooner  than  we  are  ready  to 
meet  the  responsibilities  which  will  thereby  be  placed  before  us — 
the  Bolshevist  rule  will  either  collapse  of  its  own  rottenness  or 
be  overthrown.  When  that  happens,  it  is  morally  certain  that 
all  agreements  entered  into  by  it  will  be  repudiated  and  annulled. 
/'On  March  2,  1920,  there  assembled  in  Paris,  a  representative 
conference  of  Russian  political  leaders  representing  most  of  the 
democratic  political  groups.  That  conference  declared  that : 

"The  Russian  people  will  never  consider  the  agreements  be- 
tween the  Soviet  rule  and  other  countries  as  binding  upon  them. 
They  will  not  confirm  any  arrangement  by  which  the  property 
looted  by  the  Soviet  rule  from  Russian  citizens  will  be  accepted 
in  exchange  .  .  .  Still  less  will  the  Russian  people  tolerate 
the  distribution  in  its  name  and  on  its  account,  of  any  of  the  State 
property  of  Russia" 

That  declaration  was  signed  by  Prince  G.  E.  Lvov,  former 
Prime  Minister  in  the  Russian  Provisional  Government;  I.  I. 
Petrunkevitch,  the  founder  of  the  Constitutional-Democratic 
Party;  A.  I.  Konovalov,  former  Vice-Prime  Minister  and  Min- 
ister of  Trade  and  Industry  in  the  Russian  Provisional  Govern- 
ment; Prof.  Paul  Miliukov,  former  Minister  of  Foreign  Affairs 
in  the  Provisional  Government;  M.  M.  Vinaver,  Chairman  of  the 
Central  Committee  of  the  Constitutional-Democratic  Party; 
Vladimir  Nabokov,  leading  member  of  the  Constitutional-Demo- 
cratic Party;  Boris  Savinkov,  former  Minister  of  War  in  the 
Provisional  Government  and  a  prominent  Socialist-Revolution- 
ist; M.  I.  Stakhovich,  E.  N.  Kedrin,  F.  I.  Rodichev,  A.  Smir- 
nov,  M.  S.  Adjemov,  Prof.  Boris  Nolde,  Prof.  M.  I.  Rostovtsev, 
P.  N.  Gronsky,  S.  Metalnikov,  S.  G.  Lianozov  and  A.  I.  Ratkov- 
Rojnov.  J. 


With  Soviet  Russia  19 

On  Mar.  14,  1920,  another  conference  was  held  in  Paris,  at- 
tended by  prominent  leaders  of  the  All-Russian  Constituent  As- 
sembly, which  the  Bolsheviki  suppressed  by  force  of  arms,  and  of 
the  Party  of  Socialists-Revolutionists,  which  in  the  election  of 
1918  proved  to  be  by  far  the  largest  political  party  in  Russia. 
Among  the  conferees  was  Kerensky,  whose  recent  return  to  the 
leadership  of  the  anti-Bolshevist  forces  of  democratic  Russia  is 
significant.  A  notable  declaration  issued  by  this  conference  ends 
with  these  words :  "We  know  that  Russia  still  has  to  pass  through 
grave  trials,  but  we  also  know  that  Russia  will  again  become  a 
great  democratic  country.  And  the  treaties  and  obligations  which 
her  present  rulers  may  assume  to  conclude  in  her  name  and  bind 
her  with,  cannot  be  regarded  as  obligatory  and  binding  upon* 
future  Russia"*  ^ 

IX.     The  Danger  of  Extensive  Trade  on  Credit 

Having  regard  to  these  things,  I  submit  that  large  investments 
in  Soviet  Russia,  or  the  extension  of  any  considerable  amount  of 
credit  to  the  Soviet  Power — which  is  exactly  what  extensive  trade 
with  Russia  means — would  jeopardize  the  entire  economic  life 
of  America.  Russia's  needs  are  enormously  in  excess  of  any 
capital  she  has  or  can  build  up  in  any  reasonable  time.  In  the 
ten  years  immediately  preceding  the  World  War,  Russia's  capital 
building  capacity  amounted  to  not  over  one  billion  rubles  (gold) 
per  annum;  her  present  pressing  needs  call  for  an  expenditure 
of  not  less  than  thirty  billion  rubles  (gold)  in  the  first  three 
years.  This  is  obviously  far  in  excess  of  her  own  capacity  and 
must  be  furnished  by  foreign  investors,  if  at  all.  Foreign  capital 
requires  security,  and  Bolshevism,  by  its  very  nature,  denies  that 
security.  To  eliminate  capital  and  profit  upon  capital  is  the 
raison  d'etre  of  Bolshevism.  To  accomplish  that  end  the  Bol- 
shevist rulers  of  Russia  are  ready  and  willing  to  use  all  possible 
means,  including  confiscation  and  repudiation  of  every  obligation. 
We  have  only  to  suppose  millions  or  billions  of  American  capital 
to  be  invested  in  Russia — goods  supplied  on  the  credit  basis  of 
Russian  securities,  for  example — and  the  whole  investment  con- 


*See  also  Appendix  on  pp.  29-31. 


20  Memorandum  on  Trade 

fiscated  and  all  obligations  repudiated  by  the  Soviet  Government, 
to  realize  how  disastrously  such  a  policy  by  the  Soviet  Govern- 
ment would  affect  every  American  family,  especially  the  wage- 
earners.  It  is  no  ordinary  hazard  of  commerce  that  we  are 
asked  to  take;  it  is  to  stake  our  own  existence  upon  credit  no 
more  secure  than  the  promise  of  men  who  have  already  revealed 
their  intention  and  purpose  to  default  whenever  and  however 
they  can. 

Convinced  as  I  am  of  these  things,  I  do  not  think  that  the 
United  States  Government  should  prevent  American  citizens  who 
want  to  trade  with  the  Soviet  Government,  and  are  prepared  to 
assume  all  the  risks,  from  doing  so.  It  does  not  seem  to  me  to 
be  the  duty  of  the  Government  to  place  special  and  unusual  ob- 
stacles in  the  way  of  such  trade  relations,  except,  of  course,  in 
so  far  as  refusal  to  recognize  the  Soviet  Power  makes  trade  more 
difficult  than  it  would  otherwise  be.  Our  present  policy  is  identi- 
cal with  that  expressed  at  San  Remo  by  the  French  and  Belgian 
delegates,  on  June  7,  1920,  namely,  "that  anyone  who  is  willing 
to  trade  with  Soviet  Russia  should  do  so  at  his  own  risk  and 
peril,  without  any  official  support  or  assistance."  That  policy  is 
entirely  sound.  At  the  same  time,  for  the  reasons  already  given, 
and  for  others  to  follow,  I  would  advise  American  traders  against 
attempting  to  trade  with  Soviet  Russia,  except  in  a  very  small 
way  and  with  the  most  complete  insurance  against  loss. 

X.     Other  Nations  and  Trade  With  Russia 

Turning  now  to  the  purely  economic  aspects  of  the  subject,  it 
is  a  significant  fact  that,  notwithstanding  their  close  proximity 
to  Soviet  Russia,  their  keen  interest  in  developing  trade  with 
Russia  as  manifested  by  the  activity  of  their  numerous  trade  com- 
missions, and  the  fact  that,  owing  to  the  state  of  international 
exchange  rates,  they  are  in  a  far  better  position  to  trade  with 
Russia  than  we  are,  Germany  and  the  Scandinavian  states  have 
not  thus  far  succeeded  in  consummating  any  important  amount 
of  trade  with  Soviet  Russia.  I  respectfully  suggest  that  from 
the  Department  of  Commerce  the  Committee  on  Foreign  Relations 
can  secure  abundant  evidence  of  the  truth  of  this  statement,  fur- 
nished by  our  consular  representatives.  I  take  steel  as  an  ex- 


With  Soviet  Russia  21 

ample :  It  is  very  well  known  that  one  of  the  most  pressing  needs 
of  Soviet  Russia  at  the  present  time  is  a  supply  of  steel  rails  and 
other  steel  and  iron  products.  It  is  perhaps  less  well  known,  but 
equally  true,  that  Germany  possesses  excessive  stocks  of  these 
very  products.  She  has  been  obliged  to  cut  her  prices  about  50 
per  cent,  in  order  to  get  rid  of  this  excess.  She  is  at  the  present 
time  underselling  every  steel  producing  nation,  including  the 
United  States,  and  the  effect  of  that  competition  is  reflected  in  the 
condition  of  the  American  steel  industry.  We  could  not  supply 
the  Russian  demand  at  prices  which  would  compete  with  the 
German  prices.  At  the  same  time,  Germany  is  in  dire  need  of 
such  food  products  and  raw  materials  as  Russia  normally  ex- 
ports. She  would  welcome  the  barter  of  her  excess  steel  and  iron 
products  for  grain,  for  example,  whereas  no  such  trade  would 
be  possible  for  us  with  our  own  abundant  grain  supply.  Yet  the 
fact  remains  that  Germany  has  not  been  able,  despite  vigorous 
efforts  on  the  part  of  her  statesmen  and  business  men,  to  effect 
any  such  exchange. 

In  this  connection,  let  me  call  attention  to  the  fact  that  when 
I  was  in  Stockholm  in  October,  1920,  I  was  credibly  informed 
that  at  Riga  there  was  an  immense  amount  of  merchandise  which 
had  been  consigned  to  Soviet  Russia  by  British  firms,  and  was 
being  held  up  at  Riga  because  the  Bolshevist  purchasing  agencies 
either  could  not  or  would  not  pay  for  the  goods.  I  was  credibly 
informed  that  these  goods  consisted  for  the  most  part  of  things 
vitally  necessary  to  the  people  of  Russia,  such  as  agricultural  im- 
plements, leather  goods,  electrical  machinery,  condensed  milk,  and 
so  on.  The  representative  of  one  British  business  house  in- 
formed me  that  these  goods  were  being  returned  to  England,  in 
some  instances,  and  in  others  sold  in  the  Scandinavian  countries 
at  a  considerable  loss.  Since  that  time  the  Latvian  paper,  Poja 
Koeln,  has  published  an  interesting  article  corroborating  this 
statement  of  conditions.  Doubtless  the  Russian  Division  of  the 
Bureau  of  Commerce  and  Industry  could  furnish  your  Committee 
with  precise  and  detailed  information  upon  this  most  important 
point. 

It  is  now  quite  well  established  that  Soviet  Russia  does  not 
possess  any  large  superfluous  stocks  available  for  export.  The 


22  Memorandum  on  Trade 

legend  of  the  "bursting  corn  bins,"  referred  to  by  Mr.  Lloyd 
George  in  a  famous  speech  in  the  House  of  Commons,  has  now 
been  thoroughly  exploded.  Russia's  natural  resources  are  prac- 
tically unlimited,  but  there  is  a  world  of  difference  between  po- 
tential wealth,  such  as  ores  in  the  ground,  and  actual  wealth 
such  as  mined  ores  ready  for  shipment.  Such  supplies  as  there 
are  in  Soviet  Russia  today  are  stores  left  over  from  the  old  re- 
gime, and,  except  in  very  insignificant  instances,  are  needed  by 
the  Russian  people  themselves.  This  is  the  uniform  testimony 
of  the  responsible  Bolshevist  officials.  The  Moscow  Pravda,  offi- 
cial organ  of  the  Bolsheviki,  summed  up  the  matter  on  Jan.  3, 
1920,  when  it  said :  "Hitherto  we  have  been  living  on  the  stores 
and  machinery,  the  means  of  production,  which  we  inherited  from 
the  bourgeoisie.  We  have  been  using  the  old  stores  of  raw  mate- 
rial, half-manufactured  and  manufactured  goods.  But  these 
stores  are  getting  exhausted  and  the  machinery  is  wearing  out 
more  and  more."  In  that  same  month,  Rykov,  President  of  the 
Supreme  Council  of  the  National  Board  of  Economy,  declared 
that  the  lifting  of  the  blockade  could  not  solve  the  raw-material 
crisis,  but,  "on  the  contrary,  the  lifting  of  the  blockade  .  .  . 
will  mean  an  increased  demand  for  raw  materials,  as  these  are 
the  only  articles  which  Russia  can  furnish  to  Europe  and  ex- 
change for  European  commodities.  The  supplies  of  flax  on  hand 
are  sufficient  for  a  period  of  from  eight  months  to  a  year.  But 
we  shall  not  be  able  to  export  large  quantities  of  flax  abroad" 

There  is  no  possibility  of  any  large  exports  of  flax  or  of  wheat 
from  Russia.  Any  exportation  of  these  must  be  at  the  expense 
of  additional  misery  and  suffering  inflicted  upon  the  Russian 
people.  How  miserably  the  attempt  to  exchange  Russian  wheat 
for  Italian  manufactured  goods  terminated,  is  presumably  well- 
known  to  your  Committee.  The  Bolshevist  economist,  Bagaiev, 
correctly  said  in  the  Ekonomicheskaya  Zhizn  in  September  last 
that  "There  can  be  no  question  of  the  existence  of  any  surplus 
for  export.  We  shall  have  to  export  what  we  are  greatly  in  need 
of  ourselves,  merely  for  the  purpose  of  getting  something  still 
more  indispensable  in  exchange.  Every  imported  locomotive, 
every  plough  we  get,  will  have  to  be  paid  for  literally  with  strips 
carved  from  the  body  of  our  national  industries." 


With  Soviet  Russia  23 

I  ignore  for  the  moment  the  question  of  the  right  of  the 
Soviet  Government  to  dispose  of  the  stocks  of  commodities  they 
have  seized  and  confiscated,  and  the  question  of  our  right  to 
receive  them  in  trade,  and  submit  simply  that  it  is  quite  evident 
that  all  the  commodities  the  Soviet  Government  has  available 
for  export,  including  the  entire  gold  and  platinum  reserve,  to- 
gether amount  to  only  a  small  fraction  of  the  value  of  the  goods 
sought;  that  so  far  as  that  portion  of  the  possible  trade  is  con- 
cerned, we  are  in  no  position  to  compete  with  Germany,  for  ex- 
ample, in  view  of  her  readiness  to  do  a  barter  trade  upon  the 
basis  of  prices  we  cannot  possibly  meet ;  that  what  Soviet  Russia 
requires  from  us  is  an  enormous  amount  of  credit,  for  which 
there  is  no  security  in  sight.  As  an  economist  I  have  no  hesita- 
tion in  saying  that  there  cannot  be  any  satisfactory  security  for 
extensive  credits  to  Russia  until  there  is  such  an  organization  of 
her  productive  capacity  as  Bolshevism  by  its  very  nature  pre- 
cludes. 

XI.  .  The  Gold  Supply  of  Soviet  Russia 

About  a  year  ago,  as  the  result  of  extensive  inquiries,  I  reached 
the  conclusion  that  the  total  gold  and  platinum  reserve  of  Russia 
did  not  exceed  600,000,000  rubles,  or  about  300,000,000  dollars. 
When  I  was  in  London  in  September  and  October  last,  I  checked 
up  my  figures  against  those  compiled  by  the  highest  authorities 
in  England,  and  found  that  these  investigators,  working  quite 
independently,  had  arrived  at  practically  identical  conclusions. 
Since  that  estimate  was  made  there  has  been  some  augmentation 
of  the  total  from  various  sources,  including  military  conquest, 
confiscations  and  mining,  but  the  expenditure  for  goods  and 
propaganda  abroad  has  certainly  been  greater.  It  is  certain  that 
the  total  now  in  possession  of  the  Soviet  Government  does  not 
exceed  500,000,000  rubles,  or  250,000,000  dollars.  That  this  esti- 
mate is  excessive,  is  practically  certain.  The  facts  speak  for 
themselves  and  require  no  interpretation  at  my  hands. 

A  very  considerable  part  of  the  gold  in  possession  of  the  So- 
viet Government,  approximately  120,000,000  dollars,  belongs  to 
Roumania.  It  is  part  of  the  Roumanian  gold  reserve  which  was 
sent  to  Moscow  for  safe  keeping,  before  the  Revolution  of  1917, 


24  Memorandum  on  Trade 

when  there  was  danger  that  it  would  fall  into  the  hands  of 
Germany.  The  Roumanian  Government  has  laid  claim  to  this 
gold,  and  there  can  hardly  be  any  dispute  as  to  the  validity  of  the 
claim.  Waiving  once  more  the  not  unimportant  questions  of 
honor  and  morality  involved,  it  is  apparent  that  to  accept  such 
gold  in  payment  for  goods,  is  a  very  risky  business.  In  addition 
there  are  other  claims  lodged  against  this  gold,  notably  that  of 
France.  It  is  reported  upon  credible  authority  that  the  French, 
who  are  occupying  Memel  on  the  Baltic,  confiscate  all  gold  which 
they  find  being  exported  from  Russia,  even  taking  it  from  the 
persons  of  travellers.  They  insist  that  the  indebtedness  of  Rus- 
sia to  France,  on  account  of  the  great  loans  to  the  former  Russian 
Government,  must  be  regarded  as  a  first  lien  upon  the  gold  of  the 
Russian  Government.  In  addition  to  that,  at  the  meeting  of  the 
Supreme  Economic  Council  last  April,  the  French  delegate  gave 
formal  notice  that  France  would  claim  the  fifty  million  francs 
belonging  to  the  French  Government  which  was  on  deposit  in  the 
Russian  State  Bank  and  confiscated  by  the  Bolsheviki.  The  claim 
of  the  French  Government  set  forth  that  France  will  "in  no  cir- 
cumstances recognize  the  right  of  the  Soviet  Government  to  dis- 
pose of  the  Russian  gold  reserve,"  and  will  "institute  proceedings 
against  all  institutions  and  individuals"  who  agree  to  accept  gold 
payments  from  the  Soviet  Government  or  its  agents.  When  we 
add  to  these  claims  by  governments  with  which  we  were  allied 
in  the  War,  the  notification  by  the  Norwegian  Government  re- 
specting the  timber  confiscated  from  its  nationals,  it  becomes  quite 
evident  that  we  cannot  accept  stolen  goods  in  trade  without  in- 
curring the  risk  of  serious  international  complications. 

XII.     The  Question  of  Recognition  of  the  Soviet  Government 

I  return  once  more  to  the  fact  that  trade  with  Soviet  Russia 
upon  any  considerable  scale  necessarily  requires  recognition  of 
the  Soviet  Power  as  the  de  jure  Government  of  Russia.  All  the 
trade  that  is  possible  without  such  recognition  can  be  had  within 
the  limits  of  our  existing  policy,  without  the  necessity  of  changing 
as  much  as  a  single  comma  in  the  regulations  laid  down  by  our 
Government.  It  is  easy  to  see  that  in  the  absence  of  such  recog- 
nition there  are  some  difficulties  involved,  but  these  are  by  no 


With  Soviet  Russia  25 

means  insuperable.  They  are  not  greater  than  those  which  exist 
in  the  case  of  Mexico,  for  example.  It  is  also  quite  easy  to  see 
why  the  Bolsheviki  are  so  anxious  to  secure  political  recognition. 
Their  motives  are  both  economic  and  political.  In  the  first  place, 
recognition  would  stamp  with  a  certain  legality  their  confiscations 
and  their  trade  in  stolen  goods.  More  important  than  that,  how- 
ever, is  the  facility  it  would  afford  them  to  promote  social  revolu- 
tion in  this  country. 

The  Bolsheviki  are  pledged  to  a  policy  of  promoting  social 
revolution  throughout  the  world,  and  they  have  used  the  privi- 
leges and  immunities  granted  to  their  agents  and  envoys  in  various 
countries  to  foster  revolt  and  to  promote  intrigues  and  conspira- 
cies subversive  of  the  existing  government.  This  they  have  done 
without  a  single  exception,  so  far  as  I  have  been  able  to  discover. 
The  Department  of  State  could  doubtless  furnish  your  Committee 
with  an  illuminating  record  upon  this  subject.  On  July  18,  1920, 
the  Krasnaya  Gazetta  published  an  article  by  Kamenev,  the  well- 
known  Bolshevist  leader,  in  which  he  said:  "Yes,  we  are  hatch- 
ing a  plot  against  Europe  here  in  Moscow  and  are  hatching  it 
openly."  On  August  14,  1920,  the  Petrograd  Pravda  said  :  "Rus- 
sia again  forms  the  focus  of  world  politics.  Red  Troops  are  hew- 
ing a  way  for  the  Communistic  Revolution  toward  Europe,  and 
are  overthrowing  the  Treaty  of  Versailles,  thereby  relieving  the 
-fetters  imposed  upon  Germany  by  the  Versailles  Treaty."  These 
representative  utterances  must  be  considered  in  the  light  of  Le- 
nin's declaration  to  the  Conference  of  the  Third  International, 
Dec.,  1919:  "The  international  policy  of  the  Soviet  Government 
is  guided  by  a  realization  of  the  interdependence  of  Soviet  Rus- 
sia and  World  Revolution."  They  must  be  considered  in  the  light 
of  the  statement  in  the  article  by  Radek,  published  in  Maximillian 
Harden's  Zukunft,  Feb.,  1920,  that  "Soviet  Russia,  by  its  very 
existence  is  a  ferment  and  propagator  of  the  inevitable  World 
Revolution,"  and  of  Trotzky's  statement,  in  Feb.,  1919,  "Our 
whole  policy  is  built  upon  the  expectation  of  this  Revolution" 

I  call  the  attention  of  the  Committee  on  Foreign  Relations  to 
the  following  clauses  contained  in  the  twenty-one  conditions  of 
admission^  to  the  Third  International,  formulated  by  Lenin,  the 
supreme  head  of  the  Soviet  Power :  "In  almost  all  the  countries 


26  Memorandum  on  Trade 

of  Europe  and  America  the  class  war  is  entering  the  phase  of 
civil  war.  Under  such  conditions  Communists  can  have  no  con- 
fidence in  bourgeois  legality.  They  are  bound  to  create  every- 
where a  parallel  illegal  organization  which  at  the  decisive  moment 
will  help  the  party  to  fulfill  its  duty  towards  the  Revolution" 
»  iv .  .  "The  duty  of  spreading  Communist  ideas  embraces  the 
special  obligation  to  conduct  a  vigorous,  systematic  propaganda  in 
the  army.  Where  this  agitation  is  hindered  by  exceptional  laws 
it  is  to  be  carried  out  by  illegal  means." 

I  do  not  attempt  to  interpret  the  foregoing  characteristic  Bol- 
shevist statements,  nor  do  I  comment  on  them.  I  desire  simply 
to  ask  your  honorable  body  to  take  cognizance  of  the  fact  that  all 
the  agreements  the  Bolsheviki  have  yet  made  with  so-called  bour- 
geois governments  they  have  violated  and  treated  as  mere  "scraps 
of  paper."  When  in  June,  1919,  the  British  Government  arranged 
for  the  shipment  of  relief  supplies  for  the  alleviation  of  the  suf- 
fering of  the  civilian  population  of  Russia,  the  Soviet  Govern- 
ment, despite  its  solemn  pledge,  seized  the  supplies  and  appropri- 
ated them  to  the  use  of  the  Red  Army.  In  like  manner  they 
violated  their  agreement  in  the  matter  of  trade  with  the  Coopera- 
tives. They  sent  the  representatives  of  the  Cooperatives  to  the 
United  States  and  to  England  and  France  to  arrange  for  the  re- 
sumption of  trade  with  Russia  through  the  medium  of  the  Coop- 
eratives. On  Jan.  16,  1920,  the  Supreme  Economic  Council  of 
the  League  of  Nations  agreed  to  resume  trade  with  Russia 
through  the  Cooperatives,  but  the  Soviet  Government  refused  to 
permit  it,  insisting  upon  recognition  as  a  condition  sine  qua  non. 

On  Aug.  27,  1918,  the  Soviet  Government  signed  an  agreement 
with  Germany,  an  agreement  initiated  by  itself,  by  which  it  under- 
took not  to  indulge  in  "any  agitation  against  the  State  and  mili- 
tary institutions  of  Germany."  Immediately  thereafter  it  began 
to  violate  the  agreement  and  sent  millions  of  rubles  to  Berlin  for 
revolutionary  propaganda — a  fact  admitted  by  Tchitcherin,  the 
Soviet  Foreign  Minister,  in  an  official  note  to  the  German  Foreign 
Office,  the  text  of  which  was  published  in  Izvestia  Dec.  26,  1918. 
Joffe,  the  accredited  Bolshevist  Ambassador  to  Germany,  after 
his  expulsion  for  his  shameful  misuse  of  the  customary  diplo- 
matic privileges  and  immunities,  boasted  that  "the  Russian  Gov- 


With  Soviet  Russia  27 

ernment  as  a  whole,  and  its  accredited  representative  in  Berlin, 
never  concealed  the  fact  that  they  were  not  observing  this  article 
and  did  not  intend  to  do  so."  Recently,  Germany  has  had  an- 
other unpleasant  experience  with  the  Bolsheviki,  though  this  con- 
cerns representatives  of  the  Third  International  and  not  of  the 
Soviet  Government,  as  such.  In  practice  this  distinction  is  of 
very  little  consequence.  Permission  was  given  to  the  Bolshevist 
delegates,  Losovski  and  Zinoviev,  to  visit  Germany  in  connection 
with  a  Socialist  Congress.  The  permit  was  given  on  the  explicit 
undertaking  to  refrain  from  political  agitation.  Both  men  so 
shamefully  violated  the  terms  of  the  agreement  that  Dr.  Simons, 
the  German  Foreign  Minister,  had  to  cause  their  expulsion  from 
the  country. 

Every  government  that  has  had  official  relations  with  the  Bol- 
sheviki through  accredited  envoys  has  been  treacherously  at- 
tacked and  compelled  to  expel  the  envoys  for  flagrant  offenses, 
including  the  misuse  of  their  diplomatic  privileges  and  immunities 
to  foment  revolutionary  agitation.  Great  Britain  had  to  expel 
Litvinov,  the  Bolshevist  diplomat.  It  was  proved,  in  a  British 
court,  that  Litvinov  had  used  his  privileged  position  to  incite 
revolutionary  conspiracies  to  overthrow  the  British  Government. 
When  Litvinov  was  chosen  to  head  the  Soviet  Trade  Mission 
to  England  last  year,  the  British  Government  refused  to  receive 
him,  so  Kamenev  was  sent  instead.  Kamenev's  conduct  was  so 
outrageous  that  he  was  compelled  to  leave  the  country.  He  de- 
liberately altered  official  messages  from  his  Government  which 
had  been  ordered  to  submit  to  the  British  Government,  for  the 
purpose  of  misleading  the  latter,  and  in  spite  of  pledges  given 
by  himself  and  his  Government  that  he  would  abstain  from  all 
propaganda,  direct  or  indirect,  he  actively  participated  in  the  sub- 
sidizing of  the  Daily  Herald  out  of  funds  realized  from  the  secret 
and  illegal  sale  of  stolen  Russian  jewels.  Not  in  the  diplomatic 
history  of  a  hundred  years,  I  venture  to  say,  can  there  be  found 
any  parallel  to  the  excoriation  of  this  Bolshevist  diplomat  by 
Mr.  Lloyd  George,  the  British  Premier,  on  Sept.  10,  1920,  in  a 
five  hour  conference. 

Switzerland  had  to  expel  the  accredited  Bolshevist  representa- 
tives for  their  intrigues,  taking  them  to  the  Swiss  frontier  in 


28  Memorandum  on  Trade 

guarded  motor  cars.  Denmark  had  to  compel  the  regular  Bol- 
shevist envoy  and  Litvinov,  the  Bolshevist  trade  representative, 
to  leave  the  country  on  account  of  their  participation  in  move- 
ments aiming  at  revolution  in  Denmark.  Sweden,  which  had  a 
Social-Democratic  Government,  and  readily  received  the  Bolshe- 
vist Minister,  had  to  expel  him  and  close  the  Legation.  Litvinov, 
who  had  been  permitted  to  reside  in  Christiania,  and  to  conduct 
trade  negotiations  on  behalf  of  Soviet  Russia,  was  ordered  to 
leave  the  country  by  the  Norwegian  Government,  again  because 
of  his  participation  in  movements  directed  against  the  very  ex- 
istence of  the  Norwegian  State. 

This  is  only  a  partial  record  such  as  a  private  individual  has 
been  able  to  gather  from  such  sources  as  are  open  to  private 
individuals.  Doubtless  the  Department  of  State  is  in  possession 
of  much  more  complete  data.  Upon  the  basis  of  the  evidence 
herein  contained,  I  respectfully  submit  to  the  Committee  on  For- 
eign Relations  of  the  United  States  Senate  that  two  conclusions 
are  irresistible,  namely:  (1)  That  there  is  no  reason  for  changing, 
in  any  particular,  the  present  policy  of  refusing  to  recognize,  hold 
official  relations  with  or  receive  the  agents  of  the  Soviet  Govern- 
ment; (2)  The  present  policy  with  respect  to  the  regulation  of 
trade  relations  with  Soviet  Russia  should  be  maintained  as  being 
in  complete  harmony  with  American  ideals  and  the  best  traditions 
of  our  dealings  with  other  nations. 

Respectfully  submitted, 

JOHN  SPARGO. 

Old  Bennington,  Vermont. 
January  24,  1921. 


APPENDIX 

After  the  Memorandum  was  submitted  to  the  Committee  on 
Foreign  Relations  of  the  Unitec^States  Senate,  an  important  Con- 
ference of  the  members  of  the  -All-Russian  Constituent  Assembly 
took  place  in  Paris.  ,The  Conference  was  attended  by  prominent 
representatives  of  all  Russian  democratic  factions  opposed  to 
Bolshevism.  Among  the  leaders  of  the  Constitutional-Democratic 
Party  there  were  present  Paul  N.  Miliukov,  former  Minister  of 
Foreign  Affairs  in  the  Russian  Provisional  Government;  A.  I. 
Konovalov,  one  of  the  leaders  of  the  Russian  industry  and  for- 
mer Minister  of  Trade  and  Industry  in  the  Provisional  Govern- 
ment, and  M.  M.  Vinaver,  Chairman  of  the  Central  Committee 
of  the  Constitutional-Democratic  Party.  Among  the  leaders  of  the 
Social  Revolutionary  Party  there  were  present  A.  F.  Kerensky, 
former  Prime  Minister  in  the  Provisional  Government  of  Russia ; 
N.  D.  Avksentiev,  former  Minister  of  Interior  in  the  Provisional 
Government,  who  was  chosen  Chairman  of  the  Conference ;  Cathe- 
rine Breshkovsky,  the  "Grandmother  of  the  Russian  Revolu- 
tion" ;  Victor  M.  Chernov,  former  Minister  of  Agriculture  in  the 
Russian  Provisional  Government  and  President  of  the  All-Rus- 
sian Constituent  Assembly,  and  V.  M.  Zenzinov,  former  mem- 
ber of  the  Directorate  of  Five  and  one  of  the  editors  of  the 
"Volia  Rossii."  Nicholas  V.  Tchaikovsky,  the  veteran  leader  of 
the  Party  of  People's  Socialists  and  former  head  of  the  Arch- 
angel Government,  also  participated  in  the  Conference.  The  Con- 
ference adopted  unanimously  the  following  Declaration : 

"Having  deliberated  upon  the  present  international  position  of 
Russia,  the  Conference  of  Deputies  of  the  Constituent  Assembly 
declares : 

1.)  After  its  liberation  through  the  March  Revolution,  Russia 
can  never  recognize  any  despotism  as  a  legal  authority,  particu- 
larly the  Bolshevist  tyranny,  which  repudiates  the  most  elemen- 
tary principles  of  popular  rule  and  civil  liberties,  which  leans 
only  upon  the  brute  force  of  bayonets  and  ruthless  terror,  de- 
stroying systematically  the  economic  structure  of  the  country  and 
striving  to  set  up  an  economic  system  based  upon  compulsory 


30  Appendix  to 

labor  of  enslaved  workers  and  peasants.  By  general  and  con- 
stant uprisings,  the  masses  of  the  people  demonstrate  clearly 
their  implacably  hostile  attitude  towards  the  existing  regime. 

Only  a  government  which  rests  upon  popular  recognition  is  a 
lawful  authority  and  can  be  recognized  as  such  by  foreign 
powers,  with  all  the  consequences  that  follow  therefrom. 

2.)  The  peoples  of  free  Russia  cannot  hold  themselves  bound 
to  respect  any  agreements  and  contracts  whatsoever  which  may 
be  concluded  by  the  Bolsheviki  supposedly  in  the  name  of  the 
Russian  State.  It  will  therefore  be  the  first  duty  of  a  restored, 
lawful  Government  of  the  Russian  State,  resting  upon  universal 
recognition,  to  declare  as  not  binding  upon  itself  all  international 
agreements  and  contracts  concluded  by  the  Bolshevist  power. 
All  trade  agreements  will  necessarily  be  revised  from  a  stand- 
point of  their  consistency  with  the  vital  interests  of  Russia,  the 
freedom  of  her  economic  development  and  her  absolute  sov- 
ereignty. As  for  the  manner  of  meeting  Russia's  indebtedness  to 
other  countries,  contracted  prior  to  the  7th  of  November,  1917 
(October  25,  1917,  old  style),  as  also  the  question  of  determin- 
ing the  losses  sustained  by  Russia  during  the  War,  and  the  man- 
ner of  indemnification,  and,  generally,  the  problem  of  settling 
the  mutual  financial  obligations  between  Russia  and  foreign  pow- 
ers,— these  questions  will  have  to  be  settled  at  a  special  Interna- 
tional Conference  after  the  reestablishment  of  a  Government  in 
Russia  that  will  enjoy  general  popular  recognition. 

3.)  It  is  necessary  to  remove  all  artificial  barriers  in  the  way 
of  resuming  the  economic  contact  of  Russia  with  the  rest  of  the 
world  and  to  terminate  the  blockade  in  all  its  forms,  for  the  bur- 
den of  the  blockade  as  a  system  of  fighting  a  government  rests 
mainly  upon  the  shoulders  of  the  innocent  population.  Only 
after  the  lifting  of  the  blockade  will  the  masses  understand  fully 
where  the  real  source  of  all  their  unbearable,  inhuman  miseries 
lies,  for  it  is  not  so  much  in  the  blockade,  which,  as  a  matter 
of  fact,  gripped  Russia  three  years  before  the  Bolshevist  up- 
heaval, as  rather  in  the  entire  economic  policy  of  the  Bolsheviki 
that  the  cause  of  the  total  destruction  of  the  national  economy 
of  that  great  country  is  to  be  looked  for. 

The  Conference  deems  it  its  duty  to  point  out  the  terrible 


the  Memorandum  31 

danger  that  lies  in  the  possibility  that  in  the  course  of  the  restora- 
tion of  the  economic  bonds  between  our  country  and  the  outside 
world,  the  attempts  of  the  Bolsheviki  to  postpone  the  hour  of  their 
inevitable  collapse  at  all  costs  may  easily  find  support  in  out- 
side efforts  to  turn  the  Bolshevist  power  into  a  weapon  of  the 
political  and  economic  enslavement  of  Russia.  Hence,  all  at- 
tempts to  utilize  the  renewal  of  economic  bonds  with  Russia  for 
her  economic  enslavement,  or  for  an  artificial  bolstering  up, 
against  the  popular  will,  of  the  rule  of  the  Bolshevist  usurpers, 
who  will  be  expected  to  play  the  part  of  a  native  police  force  for 
the  protection  of  the  interests  of  rapacious  foreign  capital,  will 
meet  with  our  emphatic,  active  protest. 

4.)  Proceeding  from  these  considerations,  the  Conference  re- 
pudiates the  binding  force  of  the  concessions  that  are  being  given 
away  to  foreigners  by  the  Soviet  power,  for  in  this  instance  the 
invitation  of  foreign  capital  emanates  from  an  authority  which 
has  not  been  recognized  by  the  people,  and  it  is  done  on  condi- 
tions which  turn  the  granting  of  concessions  into  a  looting  of 
the  property  of  the  Russian  State,  infringing  upon  the  interests 
and  rights  of  the  citizens,  and  offensive  to  our  civic  and  national 
sentiments. 

Likewise,  we  must  consider  the  illegal  squandering  of  the  Rus- 
sian gold  reserve  by  the  Bolshevist  power  a  looting  of  the  State, 
this  reserve  being  the  basis  of  the  currency  and  financial  system 
of  the  country.  The  dissipation  of  this  reserve  will  undermine 
the  very  possibility  of  a  speedy  economic  regeneration  of  Russia. 
The  Conference  protests  emphatically  against  foreign  complicity 
in  such  dissipation" 


